Erratic exchange rates

zar-krw-exchange rate 2008Source:

The past few weeks have been a financial rollercoaster. The problems on Wall Street are being felt all over the world, and some of the people that feel it most are those that work overseas and send money home, including yours truly (and every other English teacher in Korea). I have spent this time on the edge of my seat watching the exchange rates climb and fall, dragging my stress levels along for the ride.

Average Exchange Rates and Recent Fluctuations

The average exchange rate between the South Korean won (KRW) and the South African Rand (ZAR) since I arrived here in March 2008 has been between 125KRW/1ZAR and 135KRW/1ZAR. So an average monthy salary of 2,000,000 KRW has averaged out at between R16,000 and R14,800. But when the problems on Wall Street became evident in September, things started going a bit haywire.

Over the past two months or so, the exchange rate has gone from an average of 135KRW/1ZAR, up to over 150KRW/1ZAR (weak KRW/strong ZAR), and then all the way down to 114KRW/1ZAR (strong KRW/weak ZAR), and as of today somewhere around 130KRW/1ZAR. Heaven alone knows what the rate will be on Monday.

What do these fluctations mean? Well, at 135KRW/1ZAR, a salary of 2,000,000 KRW is about R14,800. At 150KRW/1ZAR the same 2,000,000 KRW salary is only worth R13,300. And then from that low, an exchange rate of 114KRW/1ZAR is worth R17,500. That’s R4000 difference in salary just on exchange rate fluctuations!

That kind of extreme fluctuation happened two weeks ago. The rate went from 150KRW/1ZAR to 114KRW/1ZAR within two days. So I sent money home to SA at the low point, and did pretty well. If I’d sent money earlier in the week I’d have lost a bundle. I think I got lucky, because I’m not sure where the exchange rate will go from here.

What’s going on?

At the moment, both the ZAR and the KRW are weak against the US dollar. Why this is the case, I can’t really tell you. But from what I understand it probably has to do with perceptions of relative weakness in the South African and South Korean economies. I say perceptions because the South African economy and financial system are very stable, not that international investors see it that way. Anyway, the US dollar is seen as safer than the ZAR or the KRW, so investors are pulling their money out of the South African and South Korean economies. This results in a drop in the relative value of the ZAR and KRW. Why people trust the US financial system even though they are the cause of the current problems (and of the Great Depression) is totally beyond my comprehension.

So at one point the KRW was taking a beating, while the ZAR was doing well. That’s when the exchange rate was terrible for anyone earning KRW. And then two weeks ago the ZAR all of a sudden took a huge dip against the US dollar, and the exchange rate with the KRW improved. Basically, both the ZAR and KRW were doing pretty badly against the US dollar. Misery loves company, and in this case it was a good thing for anyone earning KRW  and wanting to send money to South Africa.

Since then the exchange rate has been shooting up and down on a daily basis. I’m not going to send money home for a while, but for when I do I’ve picked an exchange rate range that will be reasonably ok. Anytime the exchange rate hits that, I’ll send money home.

So is it still worth it to work in Korea?

At the moment it’s still worth it to come and work in Korea. If you were American/Canadian/British – hell, anything other than South African – then it would probably not look so good. But since the ZAR and the KRW are both doing about equally badly against the US dollar, it should still be attractive to South Africans. However, the exchange rates are still incredibly volatile, and will likely keep going up and down for the next few months.

The worst exchange rate in recent years was during 2004, when it went as high as 190KRW/1ZAR (very weak KRW/strong ZAR). If that happened again then a salary of 2,000,000 KRW would only be R10,500. At that rate I would probably stay at home, or rather go to China, Taiwan or Japan.

For the moment things seem to have stabilised a little, but with the weak KRW my planned holiday to Japan is starting to look awfully expensive! I’ll be keeping a very close eye on the exchange rates, that’s for sure.


If you also want to keep an eye on the current rates, check out this link:


6 responses to “Erratic exchange rates

  1. GreenlightmeansGO

    Hi there,

    I don’t know if the bad situation right now affects us as badly as everyone else. I don’t really look at the KRW/ZAR exchange because (as far as I know) we always have to convert to dollars first.

    It so happens that the rand is doing really horribly against the dollar, so we score on that exchange.
    When I got here (Feb 2007) the dollar was at about R7,50 and the won was at about 950 to the dollar. A salary of 2 mil would then have been
    +/-R15 750.
    At the moment, a 2 mil salary should get you 15 680 (…so it’s not that bad. Keep in mind that the 950-1000 rate was the won at it’s strongest…and it will hopefully improve from where it is now to go to about 1100.

    If you’re sticking around here for a while and you don’t have to pay fees back home, you may still be in the clear.

    Good luck, anyway

  2. Yeah, the global financial problems definitely aren’t affecting us as much as other people. The KRW and ZAR are both pretty weak at the moment.

    But the KRW/ZAR exchange rate is a good indicator of the value of the money we send home. The dollar exchange rate doesn’t really matter, since it’s just the medium. Whether you exchange directly from KRW into ZAR, or into US$ first won’t affect the value of the money you send to SA.

  3. So, what do you think will happen to South Africans doing a one year contract starting March 09, therefore returning just in time for the World Cup. I will not have to send money home monthly. therefore I have been advised to hold on to my money in Korea for as longas possible and wait for an oppertune time to send it all back to SA. Any advice? Please copy your response in an e-mail as well, if possible. Cheers

  4. Hi Christian

    Do you mean what will happen to the exchange rate? I’m pretty sure nothing drastic will happen to South Africans themselves over the next year 🙂

    Holding onto your cash is good advice. Sending home monthly tends to be inefficient, as the costs come down the more money you send at one time. I hold onto my cash in Korea until I see that the exchange rate is at a reasonably favourable level. Then I send a bunch home, usually no less than 5 million won. As I mentioned in a previous post (above), anything from 120KRW/1ZAR to 130KRW/1ZAR is a pretty good exchange rate. Anything higher (135KRW+) and I tend to wait before I send money home.

    It’s impossible to guess where the exchange rates will go, but generally the Korean economy is in good shape, and the currency should regain some of its strength over the next few months. There’s no guarantee, though. Choose an exchange rate that you are happy with, and then send money home whenever it’s at that rate. That works for me. Otherwise you’ll always be waiting for it to improve, and you’ll kick yourself when it goes up.

    Hope that helps!


  5. Hi there. Sorry to send a reply to a post around 3 years old, but maybe someone can answer my question. When I send money to SA and it is converted to Dollars before Rands… at what point is it changed into Rands? Sometimes it can take as many as 5 days for the money to arrive at the bank in SA. Is it only converted to Rands on the day it arrives in SA? Let’s say the Won is strong against the Rand on the Monday when I make the transfer and then it has weakened considerably by the Friday… I would get the Friday rate? Hope the question makes sense, thanks!

  6. Sorry I mean, what if the value of the Dollar against the Rand has weakened during the course of the week, not the Won (since I send Dollars).

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